Working Paper: NBER ID: w23902
Authors: Anna Maria Mayda; Francesc Ortega; Giovanni Peri; Kevin Shih; Chad Sparber
Abstract: The H-1B program allows skilled foreign-born individuals to work in the United States. The annual quota on new H-1B visa issuances fell from 195,000 to 65,000 for employees of most firms in fiscal year 2004. However, this cap did not apply to new employees of colleges, universities, and non-profit research institutions. Additionally, existing H-1B holders seeking to renew their visa were also exempt from the quota. Using a triple difference approach, this paper demonstrates that cap restrictions significantly reduced the employment of new H-1B workers in for-profit firms relative to what would have occurred in an unconstrained environment. Employment of similar native workers in for profit firms did not change, however, consistently with a low degree of substitutability between H1B and native workers. The restriction also redistributed H-1Bs toward computer-related occupations, Indian-born workers, and firms using the H-1B program intensively.
Keywords: H1B visa; foreign labor; employment; immigration policy; labor market
JEL Codes: F22; J61; O33; R10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Reduction in the H1B cap from 195,000 to 65,000 (J68) | Significant decline in new H1B employment at for-profit firms (J23) |
| Reduction in the H1B cap from 195,000 to 65,000 (J68) | No significant changes in the employment of native workers in for-profit firms (J79) |
| Reduction in the H1B cap from 195,000 to 65,000 (J68) | Altered selection of H1B workers (J68) |
| Reduction in the H1B cap from 195,000 to 65,000 (J68) | Shift in the composition of H1B workers towards Indian-born and computer-related occupations (J69) |